Former President Donald Trump appeared in a New York state court on Monday, where a judge is considering a case that could result in the dissolution of his considerable business interests in the state and a ban against Trump and his two adult sons ever doing business there again.
The case, which has been in preliminary hearings since January, was brought by New York State Attorney General Letitia James, and charges Trump, his sons Donald Jr. and Eric, The Trump Organization and several other defendants with multiple offenses under six "causes of action."
Those include falsifying business records, conspiracy to falsify business records, issuing false financial statements, conspiracy to falsify false financial statements, insurance fraud and conspiracy to commit insurance fraud. Among other things, James alleges the defendants repeatedly offered false and misleading financial disclosures to their financial counterparties, including banks from which they were seeking loans.
The trial begins just days after the judge, Arthur F. Engoron, issued a ruling awarding summary judgment to the state on a critical element of the case. In the ruling, Engoron found that the state had so clearly demonstrated that Trump and his co-defendants had committed "repeated and persistent fraud" in their financial disclosures that it would not be required to argue that element of its case during trial.
As a result of the summary judgment, Engoron ordered the cancellation of all New York state business certificates filed by Trump and his co-defendants and ruled that the related corporations be placed into receivership. That means the running of Trump's extensive holdings in New York, including Trump Tower, 40 Wall Street and many other properties and businesses will be out of the former president's day-to-day control.
Trump has declared his innocence on all charges, variously accusing the attorney general, who is Black, of racism in her decision to charge him and of political motivations. He has similarly attacked Judge Engoron.
In a post on his Truth Social network on Sunday, the former president wrote, "I'm going to Court tomorrow morning to fight for my name and reputation against a corrupt and racist Attorney General, Letitia James, who campaigned on 'getting Trump,' and a Trump Hating Judge who is unfair, unhinged, and vicious in his PURSUIT of me."
Trump has said that disclaimers included in the documents he provided to lenders mean that he cannot be blamed for any false information included in them. He has also said that because the loans he received as a result of the false submissions were all paid back on time, there was no harm done. The judge has repeatedly rejected those claims as having no legal merit.
Trump and his sons have all used social media to claim that their estimates of the value of their various holdings were more accurate than those trusted by the court. On Sunday, also on Truth Social, Trump wrote, "Engoron is working diligently to misrepresent me, and my net worth, which is substantially MORE than is shown on my fully 'disclaimed' Financial Statements."
Engoron's summary judgment on the issue of fraud was based on the discrepancy between the valuations that Trump and his co-defendants placed on his various assets, depending on the reasons for reporting them.
For example, the state argued that when applying for a loan, Trump inflated the value of his assets in order to receive better loan terms. In one example cited by the judge, Trump presented documents to a lender declaring the apartment he owns in Trump Tower takes up 30,000 square feet, when in reality it is slightly under 11,000. This misrepresentation resulted in the estimation of the property's value being inflated by "between $114-207 million dollars," court records show.
In another example, the court cited Trump's claim in 2014 financial statements that a golf course he owns in New York's Westchester County was worth $261 million, despite three recent professional appraisals that found it to be worth no more than $30 million.
The finding that Trump and his co-defendants are guilty of persistent fraud triggers a seldom-invoked element of state law that allows for the complete dissolution of all New York businesses owned by Trump and his co-defendants. Other penalties being sought by James at trial would include disgorgement of some $250 million in profits she claims were obtained through fraud, and a prohibition against any of the defendants serving as officers or directors of New York-based companies ever again.
Celia Bigoness, director of the Blassberg-Rice Center for Entrepreneurship Law at Cornell Law School, told VOA she is aware of only four other cases in New York history - some dating to the late 1800s - in which judicial dissolution of a business has been ordered.
It's a penalty reserved, she said, for "instances of ongoing public harm through fraud or illegality, not just one-off circumstances, but ongoing harm."
Bigoness said that under Engoron's order, all of Trump's New York-based businesses will be put into receivership, meaning that they will be under full control of a court-appointed expert who will be charged with selling them off to the highest bidder.
Trump will inevitably appeal the ruling, Bigoness said, meaning that a sale may never be finalized.
"In the meantime, though, it is very clear that the receiver is going to be in complete control of these assets," Bigoness said. "And any revenues - ongoing revenues - that are derived from these assets will be held by the receiver and are not going to make it into the pockets of Donald Trump."
On his way into the courtroom on Monday, Trump paused to speak to waiting reporters, and renewed his attacks on the judge and attorney general.
"These are corrupt people," he said, before referring to Engoron as a "rogue judge" and James as a "horrible, horrible" attorney general.
It's a strategy the former president has used in past court appearances, and one that still puzzles legal professionals.
New York attorney Danya Perry, who is representing former Trump Organization counsel Michael Cohen, a witness in the case, told VOA she would never suggest that one of her clients behave in such a manner.
"I'm not sure why he thinks that's a winning strategy," she said. "But he's certainly already lost this judge, so I'm not sure how much worse it can get for him in this courtroom."